Higher volumes soften pain of milk price slump for dairy sector
Published 29/06/2016 | 02:30
The vast majority of Irish dairy farmers are weathering the milk price crash better than 2009 thanks to higher milk volumes, lower borrowings, and better cows.
Despite milk prices falling to levels last seen seven years ago, banks and advisors said that 95pc of farmers would emerge from the current price trough without any financial scars.
The biggest buffer has been the 40pc increase in milk volumes per farm over the same period. This has allowed milk receipts to grow from €59,000 in 2009 to €97,000 this year, without a big change in overhead costs.
While this is over €20,000 lower than the bumper year of 2014, it will still leave a family farm income of close to €45,000 on the average dairy farm milking 77 cows and producing 385,000 litres of milk, according to Teagasc estimates.
Borrowings have also decreased by 35pc from the peak in 2009 when total farm borrowing was €5.25bn. Much of the 2009 figure was fuelled by the Farm Waste Management Scheme that saw farmers invest billions in upgrading sheds and yards.
Current borrowings are well under €4bn, and May was the first month this year that banks saw any increase in the overdrafts compared to the same month last year. However, dairy farmers are still only using a third of their total overdraft capacity, according to one major bank.
In addition, the genetic ability of cows on Irish dairy farms has led to a marked improvement in fertility and milk solids output.